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New Release: An Empirical Analysis of VHS/DVD Rental Success

Author

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  • James Jozefowicz
  • Jason Kelley
  • Stephanie Brewer

Abstract

This paper studies movie rental revenue in the home video industry. Using a cross-section of the top 100 films from 2001 as a sample, domestic Video Home System (VHS) and Digital Versatile Disc (DVD) rental revenues are tested for responsiveness to independent variables including: box office gross revenue, production budget, aggregate critic rating, Motion Picture Association of America (MPAA) rating, genre, star power, word-of-mouth information, total award nominations, and economic variables. Results for the Ordinary Least Squares regressions reveal positive impacts of box office revenue, stardom, Restricted (R) and Parents Strongly Cautioned (PG-13) MPAA ratings, and some genres on VHS and DVD gross rental revenues. The positive and significant coefficient on the income variable for the DVD regression and the uniform lack of significance for the award, critic rating, and word-of-mouth variables are of particular interest. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • James Jozefowicz & Jason Kelley & Stephanie Brewer, 2008. "New Release: An Empirical Analysis of VHS/DVD Rental Success," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(2), pages 139-151, June.
    • Handle: RePEc:kap:atlecj:v:36:y:2008:i:2:p:139-151
    DOI: 10.1007/s11293-008-9111-4
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    References listed on IDEAS

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    1. Dana, James D, Jr & Spier, Kathryn E, 2001. "Revenue Sharing and Vertical Control in the Video Rental Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 223-245, September.
    2. M. Bagella & L. Becchetti, 1999. "The Determinants of Motion Picture Box Office Performance: Evidence from Movies Produced in Italy," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 23(4), pages 237-256, November.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. James D. Dana, Jr. & Kathryn E. Spier, 2001. "Revenue Sharing and Vertical Control in the Video Rental Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 223-245, September.
    5. De Vany, Arthur S & Walls, W David, 1997. "The Market for Motion Pictures: Rank, Revenue, and Survival," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 783-797, October.
    6. Arthur De Vany & W. Walls, 1999. "Uncertainty in the Movie Industry: Does Star Power Reduce the Terror of the Box Office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 23(4), pages 285-318, November.
    7. VÍctor Blanco & JosÉ BaÑos Pino, 1997. "Cinema Demand in Spain: A Cointegration Analysis," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 21(1), pages 57-75, March.
    8. Dana, James D, Jr, 2001. "Competition in Price and Availability When Availability is Unobservable," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 497-513, Autumn.
    9. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
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    Cited by:

    1. Jordi McKenzie, 2010. "How do theatrical box office revenues affect DVD retail sales? Australian empirical evidence," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(3), pages 159-179, August.
    2. Milenko POPOVIĆ & Kruna RATKOVIĆ, 2013. "Oversupply Of Labor And Other Peculiarities Of Arts Labor Market," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 4(2), pages 204-230.
    3. Sumiko Asai, 2016. "Determinants of demand and price for best-selling novels in paperback in Japan," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(4), pages 375-392, November.
    4. Jo, Jee Hyung & Lee, Jong Hee & Cho, Shin, 2020. "The characteristics of videos on demand for television programs and the determinants of their viewing patterns: Evidence from the Korean IPTV market," Telecommunications Policy, Elsevier, vol. 44(8).
    5. W. Walls, 2010. "Superstars and heavy tails in recorded entertainment: empirical analysis of the market for DVDs," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(4), pages 261-279, November.
    6. Emmi Martikainen, 2014. "Does file-sharing reduce DVD sales?," Netnomics, Springer, vol. 15(1), pages 9-31, July.
    7. David Lang & David Switzer & Brandon Swartz, 2011. "DVD sales and the R-rating puzzle," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 35(4), pages 267-286, November.

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    More about this item

    Keywords

    Movie economics; Movie rental performance; VHS/DVD rental revenue; Word-of-mouth; D00; L10;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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